Wellcome Foundation v Darby & Anor [1996] UKEAT 653_95_0105

EMPOLYMENT APPEAL TRIBUNAL
BAILII case number: [1996] UKEAT 653_95_0105Case No Appeal No. EAT/653/95Venue 58 VICTORIA EMBANKMENT, LONDON EC4Y 0DS
Between
Wellcome FoundationDarby & Anor
Date 1 May 1996

JUDGE CLARK :

This appeal raises questions as to the power of Industrial Tribunals to hold preliminary hearings.

Procedural Background

Industrial Tribunals were first set up under the Industrial Training Act 1964 . In the early days the bulk of their work involved claims under the Redundancy Payments Act 1965 . Since then their jurisdiction has grown to include further individual employment rights claims, such as unfair dismissal, race and sex discrimination, equal pay claims and more recently claims for damages for breach of employment contracts.The original intention was that the tribunal system would provide an informal means of resolving disputes, untrammelled by the strict procedures to be found in the civil courts. However, from the earliest days decisions of Industrial Tribunals have been subject to domestic appeal, first to the divisional court, then to the National Industrial Relations Court and following the abolition of that court to the Queen's Bench Division and finally to the Employment Appeal Tribunal. Further appeals, with leave, go to the Court of Appeal and ultimately the House of Lords. Such appeals are on points of law only. Inevitably that has resulted in the involvement of lawyers, used to conducting litigation in a more formal setting. In this way a hybrid system mixing formality and informality has evolved. Cases frequently involve litigants in person on one side; lawyers on the other. This is such a case.The tension between formality and informality in Industrial Tribunal proceedings is to some extent reflected in the Rules of Procedure peculiar to tribunals. The first set of procedural rules were contained in the Industrial Tribunal (England & Wales) Regulations 1965 SI. 1965/1101. Subsequent alterations have culminated in the current rules, applying to Industrial Tribunals in England and Wales, to be found in Schedule I to the Industrial Tribunal (Constitution and Rules of Procedure) Regulations 1993, SI 1993/2687, as amended, ["the 1993 Rules"]. There are separate rules applicable to Scotland.The 1993 Rules retain in part the original spirit and intention behind the setting up of the Industrial Tribunal system. Rule 9(1) enjoins tribunals, so far as it appears appropriate, to seek to avoid formality in their proceedings. Rule 13(1) provides that, subject to the provisions of the rules, a tribunal may regulate its own procedure.Nevertheless, some specific rules have their origins in procedural rules applicable to the civil courts. For example, Rule 4 deals with the tribunal's power to order further particulars and discovery, analogous to that of the High Court and County Court. Indeed, Rule 4(1)(b) specifically provides that a tribunal may require one party to grant another such discovery or inspection of documents as might be granted by a county court.In this example, the tribunal is required to follow the county court practice. However, there is no general provision in the 1993 Rules to adopt a rule applicable to the civil courts where no specific rule is provided for in those rules. This position may be contrasted with the County Court. Section 76 of the County Courts Act 1984 provides:
"In any case not expressly provided for by or in pursuance of this Act, the general principles of practice in the High Court may be adopted and applied to proceedings in a county court."
Thus, by way of illustration, it was held by the Employment Appeal Tribunal under the 1985 Rules that the Industrial Tribunal had no power to order interrogatories. Carrington v Helix Lighting Ltd [1990] IRLR 6 . The power to order interrogatories is specifically granted to the High Court (RSC Order 26) and the County Court (CCR Order 14 Rule 11). The effect of Carrington has to some extent now been ameliorated by the introduction of Rule 4(3) of the 1993 Rules, no doubt designed to overcome that lacuna.It follows, in our view, that Industrial Tribunals are required to perform a delicate balancing act, preserving informality whilst observing the specific rules which bind them.

Pre-hearing procedures

The pre-hearing procedural steps available to Industrial Tribunals include the following:(1) A practice grew up whereby Industrial Tribunals heard preliminary issues. That practice is now formalised in the new Rule 6(1) of the 1993 Rules which provides:
"(1) A tribunal may at any time before the hearing of an originating application, on the application of a party made by notice to the Secretary or of its own motion, determine any issue relating to the entitlement of any party to bring or contest the proceedings to which the originating application relates."
The purpose of this procedure is to allow preliminary points to be taken which may dispose of the proceedings without the need for a full hearing on the merits, thus saving time and expense. Examples where such a procedure may be appropriate include questions relating to time limits; qualifying periods of employment (insofar as they remain extant) and compromise agreements under Section 140 of the Employment Protection (Consolidation) Act 1978 . However, not every potential preliminary issue is necessarily suitable for treatment in this way. A proliferation of preliminary hearings may add to, rather than reduce, expense and delay. The dangers of the preliminary hearing procedure becoming a premature and inappropriate investigation into the merits of the entire case is illustrated in Lindsay v Ironsides Ray & Vials [1994] ICR 384 , 392H-393A. We would refer also to the observations of the Employment Appeal Tribunal in J Sainsbury PLC v Moger [1994] ICR 800 , 809B, as to the appropriateness of holding a preliminary hearing on the issue of dismissal in that case.The question for the Industrial Tribunal must always be, when deciding whether or not to hold a preliminary hearing, is this a self-contained issue and is its resolution capable of being determinative of the whole case?Further, it is important that the preliminary issue itself is carefully and precisely formulated by the Industrial Tribunal directing a preliminary hearing, in the same way that the High Court is required to do when framing a preliminary issue to be determined under RSC Order 33 rule 3. See Allen v Gulf Oil Refining Ltd [1980] QB 156 (CA) reserved [1981] AC 101 .The power of an Industrial Tribunal to dismiss or strike out a party's case without a hearing on the merits is limited to the following circumstances:(a) Striking out the whole or part of an originating application or notice of appearance, and where appropriate, debarring the respondent from defending altogether, for non-compliance with tribunal orders for particulars, discovery and the written answers to questions procedure introduced by Rule 4(3), under Rule 4(7), and(b) Striking out the Originating Application or Notice of Appearance for failure to remit a deposit ordered under Rule 7(4). See Rule 7(7).(c) Dismissing the proceedings on withdrawal by the applicant of his originating application under Rule 13(2)(a).(d) Striking out the Originating Application or Notice of Appearance on the grounds that it is scandalous, frivolous or vexatious under Rule 13(2)(d).It is accepted on behalf of the appellants that none of these grounds arise in this case.(3) The power to order a pre-hearing assessment ["PHA"] first introduced by Rule 6 of the 1980 Rules and continued in Rule 6 of the 1985 Rules, has been replaced by the new pre-hearing review under Rule 7 of the 1993 Rules. This procedure allows the tribunal or a Chairman alone to consider the case on the basis of the pleadings (Forms IT1 and IT3) and oral and/or written representations by the parties. No evidence is called. If the tribunal considers that the contentions put forward by either party have no reasonable prospect of success, that party may be ordered to pay a deposit of up to £150 as a condition of being permitted to continue to take part in the proceedings. In addition, that party may receive a cost warning in the same way as under the former PHA procedure. Failure to remit the deposit may result in the party in default being struck out under Rule 7(7).It is to be observed that this procedure is similar to the High Court procedure under RSC Order 18 Rule 19 whereby the Court may strike out a pleading on the ground that it discloses no reasonable cause of action or defence, with the important qualification that the Industrial Tribunal has no power to strike out in these circumstances alone.

The present case

We turn now to the circumstances in this case.Miss Cleverly and Mrs Darby were formerly employed by the Wellcome Foundation Ltd ["Wellcome"] in its Environmental Health division. During that employment they were members of the company pension scheme. In January 1992 that part of the business in which they worked was transferred to Roussel-Uclaf. Their employment then terminated, together with that of a number of other employees in that division.In October 1993 they presented complaints under the Sex Discrimination Act 1975 , the Equal Pay Act 1970 and Article 119 of the Treaty of Rome to the Industrial Tribunal. They alleged unequal treatment between men and women in relation to pension transfer values on leaving the employment and the employer's pension scheme. These claims were apparently prompted by the Advocate-General's opinion in the case of Coloroll Pension Trustees Ltd v Russell [" Coloroll "].They asked that their cases be adjourned until after the European Court of Justice had given judgment in Coloroll . The complaints were placed in suspense, together with claims by other former employees of Wellcome raising similar issues. We are told that there are about 60 individual claims in all.On 22nd December 1993 the European Court of Justice gave judgment in the case of Neath v Hugh Steeper Ltd [1995] ICR 158 [" Neath "]. Judgment in the Coloroll case was given on 24th September 1994 [1995] ICR 179 . Wellcome contend that the effect of those decisions is to defeat these complaints brought under Article 119 . They further contend that the provisions of the Sex Discrimination Act and Equal Pay Act have no application to the claims. Further, they take limitation points which have yet to be determined.For reasons which are not immediately apparent Mrs Darby's complaint alone was assigned to the London (North) Industrial Tribunal. On 4th November 1994 her case was listed for a directions hearing before a Chairman, Mr M S Rabin, sitting alone. Mrs Darby did not attend and was not represented at that hearing; Wellcome was represented by its in-house solicitor, Mr R Pryn. On that occasion the Chairman made an interlocutory order ["the Rabin order"] in these terms:
"In view of the decision of the European Court of Justice in the Coloroll case (answer to question 5) it would appear that there is no basis for the claim of sex discrimination. Accordingly it is ORDERED that there should be a Preliminary Hearing on the issue that in view of the decision of the European Court of Justice in the Coloroll case the claim of sex discrimination is without foundation."
Learning of that order, Miss Cleverly applied to have her case joined with that of Mrs Darby at the forthcoming preliminary hearing which was in due course heard by a full tribunal sitting at London (North) (Chairman: Mrs R S L Martin) on 25th March 1995 ["the Martin tribunal"]. At that hearing Miss Cleverly represented both applicants; Wellcome were represented by Mr C Newman of Messrs Slaughter & May ["the solicitors"] now instructed on the company's behalf.We have been shown copies of communications passing between the London (North) Industrial Tribunal and the solicitors in February 1995.On 6th February the tribunal sent out notice of hearing to Miss Cleverly and the solicitors headed "Preliminary Hearing" . It gave the date of hearing as 20th March (later put back to 25th March).On 20th February the solicitors wrote the Industrial Tribunal, referring to that notice of hearing. In that letter they request the following:
"1. That the preliminary hearing be a pre-hearing review to determine whether Miss Cleverly's claim should be dismissed on the grounds that it is without foundation;
2. That the preliminary hearing be used to consider not only the merits of Miss Cleverly's claim but also the merits of all other claims brought against the Respondent on the same grounds, including the claim brought by Mrs Darby (case number 55354/93)."On 28th February the tribunal secretariat replied to the solicitors, with a copy to Miss Cleverly, in the following terms:
"I have referred your letter of 20 February 1995 to a Chairman of the Tribunals who has directed that the preliminary hearing in Miss Cleverly's case will take place as arranged on 20 March 1995. If at the preliminary hearing it is found that there is no jurisdiction to hear the claim then it is unlikely the other claims will proceed."
Before the Martin tribunal Miss Cleverly, we are told, gave evidence. Some correspondence and documents were placed before the tribunal. They heard submissions on behalf of the parties. The tribunal's decision, sent with extended reasons to the parties on 4th May 1995, is in these terms:
"The unanimous decision of the Tribunal is that the Applicants complaint of sex discrimination should proceed to a full merits hearing, subject to a further preliminary hearing as to whether or not the application is out of time."
Against that decision Wellcome now appeal. Mr Newman has sought to argue before us that the Martin tribunal were wrong in law in distinguishing the cases of Neath and Coloroll from the facts of this case. It seems to us that such an appeal is wholly mis conceived for the following reasons:(1) The Rabin order ought not to have been made. The question as to whether or not the effect of the Coloroll decision is that these complaints of sex discrimination fail is the substantive issue in the case. It can only be decided by the Industrial Tribunal after hearing full evidence and argument. It is not a preliminary issue for the purposes of Rule 6(1). Further, the question for the Industrial Tribunal is not framed in such a way that the answer is capable of resolving the case without more.(2) By their letter dated 20th February the solicitors asked that the preliminary hearing be a pre-hearing review to determine whether Miss Cleverly's claim should be dismissed on the grounds that it is without foundation. Such a request serves only to exacerbate the problem. The tribunal has no power to dismiss a claim at a pre-hearing review held under Rule 7. The sanction where a tribunal finds, without hearing evidence, that a party's case has no reasonable prospect of success, is limited to ordering a deposit to be paid and giving a costs warning. No such order was made in this case.(3) The Chairman's response to that letter, contained in the tribunal's reply dated 28th February 1995, demonstrates a further misconception. The issue identified in the Rabin order does not go the tribunal's jurisdiction. An answer in favour of the employer could not prevent the applicants from pursuing their complaints to a full hearing on the merits.(4) In fact the Martin tribunal did not deal with the case as a pre-hearing review but as a preliminary hearing under Rule 6(1). The hearing itself fell between two stools. Limited evidence was heard from one side only. Some, but presumably not all relevant documents were considered. Legal argument was presented against that incomplete evidential background. The tribunal decided that the case ought to go to a full hearing; not only are we satisfied that such a conclusion discloses no error of law, it was unquestionably right.(5) Now there is an appeal. What order can we make? We have no more power than did the Industrial Tribunal to dismiss these complaints without a proper hearing on the merits, whatever the true merits may be. In these circumstances the appeal is pointless.This is a case which illustrates only too graphically the false economy in taking procedural short-cuts which do not in fact exist. We urge parties, and tribunals faced with requests to hold preliminary hearings which offer the superficial attraction of shortening proceedings, to pause and consider first, whether the particular issue is properly one to be taken in advance of a full hearing and secondly, whether its resolution in one party's favour will in fact dispose of the whole case.The appeal is dismissed.